The Experts’ View: Rethinking the product life cycle for the digital age

INDUSTRY VIEW

28 April 2017
| Author: Shane Richmond

Globalisation, compliance and consumer demand for personalised products are driving a flood of data and complexity. How do companies manage this complexity and thrive?

1. Introduction

The flood of data and complexity facing modern businesses leaves companies with two options, said Tim Rashbrooke, of Siemens Industry Software, opening a business reporter breakfast briefing at London’s Savoy Hotel. He said companies can either run from it, or embrace the complexity, master it and turn it into a competitive advantage.

Attendees at the briefing, senior executives from a range of industries, discussed the challenges brought about by the drivers of this complexity – globalisation, compliance and consumer demand – and how they are meeting them.

The solution, most contributors agreed, lies in harnessing technology and people to find ways to manage this data and turn it into an advantage. However, this is not without difficulties, as many of those present explained.

2. The drivers of change

a. Customer expectations

Thanks to mobile technology and the internet, customer expectations have increased enormously. They now expect to be able to order products from any device, in any location and receive them incredibly quickly – within hours, in some cases.

They are willing to engage with a brand more quickly than ever but they will also disengage faster than ever if their standards are not met, said Mr Rashbrooke.

Millennials, who have grown up with this technology, are even more demanding and change their habits, tastes and fashions very quickly, said Giles Gordon, from Kao UK. A 5-10-year innovation plan is now out of date almost instantly.

This also has a knock-on effect inside companies, where employees now expect the technology they use at work to offer the same kind of experience that they get as a customer.

The demand for a cross-platform experience is a challenge for retailers, too. “We struggle to identify one customer across platforms,” said Toni Levene, from Not on The High Street. “It is hard to identify a customer who, for example, begins a purchase on mobile and then completes it on desktop. We can only identify them if they are logged in and on mobile many customers don’t want to take the time to do that.”

At the same time, many companies must cope with an active community of customers on social media. Some are simply discussing the brand, others use social media as a customer service channel but all of them are creating data that is potentially useful. The problem is, as Mr Gordon said, that to get anything useful from it, you have to be able to sort the signal from the noise.

c. Globalisation and compliance

Globalisation – of supply chains, as well as sales opportunities – means much more data coming in from many more sources. All of this needs to be connected and made sense of to keep the business running smoothly, maintain quality and to provide a record trail for compliance purposes.

Customers now expect more than simply complying with regulations, said Anna Palmgren-Houel, from Colart International. She pointed to the backlash against taxi firm Uber, which had seen customers cancel their accounts following a string of controversial incidents, such as revelations about sexism within the company.

“New businesses are driven to be more ethical than compliance requires and that puts more pressure on everyone else,” said Ms Palmgren-Houel.

Managing governance and risk in an international company is a complex process but for most businesses there is the added complexity of a global network of suppliers. How do you manage the data produced when ensuring the quality of ingredients your supplier provides or the working conditions within their factories?

“We have very strict controls around how we behave but we can’t always control how suppliers behave,” said Martin Jones, of Pentland Brands. “How do we manage that while also innovating at speed?”

3. Managing complexity

a. Technology

The key to realizing a competitive advantage from increasing amounts of data is finding the technology to manage it. It must be a system that will work with the company’s existing technology. For some businesses, the right approach will be to start small and gradually integrate more and more functions with legacy technology.

Jamie Buchanon, of Hornby, said: “We recently moved to a dashboard that brings in lots of pieces of data. It is getting better every quarter.”

For others, the best thing will be to start completely from scratch. What doesn’t work, said Martin Jones, is the ‘band aid’ approach – attempting to patch up problems with short term solutions.

Ms Levene said: “For us it’s about testing concepts first before we invest in the technology. We often won’t know the right technology solution until we have a chance to test it.”

Companies that don’t embrace complexity and find ways to manage it risk losing out to new entrants who can build products with modern technology at the heart. These firms can scale a product very quickly and are usually very nimble when it comes to adapting their business model. This is an area where established firms can be left behind if they do not have the technology to react to new opportunities.

The pace of change can be challenging for established businesses, said Mr Buchanon. “Not so long ago we were putting QR codes on everything,” he said. However, Ms Palgren-Houel pointed out that even new companies can suffer from legacy technology because the pace of change is so rapid that systems are often unable to keep up.

b. People

Most attendees agreed that before a business can solve its technology problems, it needs to make sure its people and processes are able to cope. “We have legacy people, legacy processes and legacy systems,” said Dan Curran, of Debenhams.

“We have put together multi-disciplinary teams to help to change the mindset of staff before we attempt to change the system,” said Mr Buchanon.

Stuart Jones said that this kind of collaborative working across teams is often hard to achieve because product managers can be trapped in their siloes, with little chance to influence others. Changing that requires senior managers to empower product managers to experiment with new ways of working.

Some of those at the briefing had found some success in separating their business transformation people from the ‘business as usual’ people. This has the advantage of allowing the business as usual people to continue without being distracted. However, it risks leaving them behind, with a lot of work to be done to integrate them into the transformed business.

Martin Jones said: “The key thing is to be able to fail fast and learn from that. You can develop things outside the mainstream of the business and then grow those that work, while quickly moving on from failures.”

Furthermore, gleaning something useful from the flood of data your company generates depends very much on having people with the skills to find those insights. Adella Hogg, of Not on The High Street, said that, to a large extent, the insights a business can gain from data are dependent on the skill of the person interpreting it. Companies that do not have these skills available will need to recruit suitable candidates.

4. Conclusions

Meeting the challenge of increased complexity is not a simple task. Many businesses are now global businesses, not only because of where they have offices but also because of where their suppliers and customers are. These customers have increased demands and can interact with the brand on many more platforms. At the same time, the business’s actions are under increasing scrutiny from regulators.

In summarising the discussion, Ben Sheath, of Siemens, noted that everyone is struggling with similar challenges and the pressure to respond to change driven by digitalisation. The answer, he said, comes down to creating a strategy that connects people, information and processes, enabling the transparency necessary for effective decision making.

Some businesses are turning the increased customer expectations to their advantage by inviting them to co-create products. This can entail customers submitting new ideas, customising existing products or even just doing something as simple as voting on what the company does next.

Hornby’s ‘Kitstarter’ campaign asked customers to vote on which historic Airfix model aircraft kits should be re-released. Mr Buchanon said the company had been pleasantly surprised by the level of engagement the project had generated.

Other businesses are approaching the challenge by finding small ways to gain insights from data and then expanding this technology over time.

Companies that know more about themselves and their customers, understanding social and ethical concerns, can deliver a product or service that is aligned with brand aspiration, said Mr Sheath. Therefore, the ability to derive insight from all these internal and external sources of information becomes a differentiator.

Mr Rashbrooke concluded that the key question, the one that all companies are grappling with, is how to turn data into knowledge. Those businesses that avoid the problem will fail but those who rise to that challenge and turn it to their advantage have the chance to flourish.